& Tornado Alley
Privatization in Japan in the 1980s
During the period from 1981 to 1983 the Provisional Commission for Administrative
Reform (PCAR) made five recommendation reports on the privatization of
public enterprises in Japan. The Privatization Act of 1984 implemented some
of the those recommendations but in many intances deviated from the PCAR's
recommendations. The three major public enterprises to be privatized were
- Japan Tobacco and Salt Public Corporation (JTSPC): The PCAR
recommended that the JTSPC be made into a corporation. Initially the Government
would own all of its shares but the Government would sell shares to the public.
The JTSPC had a monopoly on the growth and importation of tobacco and tabacco
products. The PCAR recommended that this monopoly be phased out over time.
The Government's privatization involved the maintaining of the monopoly in
the growth of tobacco but allowed for more opportunity for private companies
to import tobacco and tobacco products. The Government maintained a dominant
- Nippon Telegraph and Telephone (NTT): The PCAR called for the creation
of a corporation and the eventual sale of all shares by the Government.
The program implemented involved very slow sale of shares by the Government
with the Government retaining one third of the shares.
- Japan National Railways (JNR): The Government followed the PCAR recommendations
and broke JNR into seven blocks, six being passenger companies and one a
freight company. There was to be no shares held by the Government. The
privatization of JNR involved a special problem because of its large debt.
The debt was passed on to freight line and three passenger lines on the
main island of Honshu. The corporations which replaced JNR were:
- East Japan Railway Co.
- West Japan Railway Co.
- Tokai Railway Co.
- Hokkaido Railway Co.
- Kyushu Railway Co.
- Shikoku Railway Co.
- Japan Freight Railway Co.